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Credential ABCP buyout likely this week


BOYD ERMAN

April 14, 2008 at 11:47 AM EDT

Credential Securities will probably unveil a plan to buy out frozen ABCP held by more than 300 clients this week, the investor committee overseeing a restructuring of $32-billion of frozen paper told investors today.

Credential is working on a plan and the committee is "reasonably optimistic it will be announced in the next few days," said committee chairman Purdy Crawford.

Small investors who bought asset-backed commercial paper and ended up stuck with notes that couldn't be traded or redeemed have been pushing to get all their money back as a restructuring nears completion. The committee wants to have the small investors taken care of because they have the votes to ensure that the restructuring proposal will pass.

Canaccord Capital Inc., which also sold ABCP to clients, last week unveiled a plan that will get almost all the firm's clients all their money back, plus any interest they are entitled to under the restructuring. Mr. Crawford told investors on a Monday conference call that Credential's plan may be modelled on Canaccord's proposal.

"We are very, very hopeful that Credential will come with a plan very similar to Canaccord's, and if that's the case, and we're optimistic that that will be the case, then you will receive your principal back," Mr. Crawford said, adding that investors "should also get accrued interest."

Credential is the securities-dealer arm of a group of Canadian credit unions.

 

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